Amending for tax reform

Property tax exemptions have been a hot topic for the past few years, as Wyoming residents have seen both values and taxes increase following the influx of new residents both during and after the pandemic.

While a flurry of bills were introduced in the 2024 Wyoming Legislative Session, only four passed both the House and Senate and only three were signed into law by the governor. House Bill 3, House Bill 45 and Senate File 89 were all signed by Governor Mark Gordon while House Bill 54 was not. According to Laurie Urbikit, a lobbyist for the Wyoming Association of Realtors, any effective reform is prevented by how property tax is structured under the Wyoming Constitution.

Urbikit, on behalf of the 4 Wyoming PAC, stopped in Saratoga on July 29 as part of a statewide campaign for Constitutional Amendment A.

Property Taxes, Constitutionally

Currently, under Article 15, Section 11 of the Wyoming Constitution, property taxes are split into three classes. Mineral, oil and gas companies are taxed at 100% of their production value, industrial is taxed at 11.5% and “all other” includes personal property and residential and commercial property. However, this wasn’t always the case.

“In 1987, the mineral industry in Wyoming sued the State of Wyoming saying that their position on property taxes was unconstitutional. The Wyoming Constitution, at that time, said all property taxes would be taxed uniformly and they were not. The Supreme Court agreed and said ‘You are taxing differently in all 23 counties,’” said Urbikit. “There was a massive effort to revamp our tax situation across the state and bring uniformity not only to residential properties but commercial properties [and] minerals. What they did was they passed a constitutional amendment that set up three separate tiers of taxation. Then they changed the constitution to say that all properties in each class, or tier, would be taxed uniformly.”

Higher Value, Higher Taxes

Following the pandemic and the rush of new residents, longtime homeowners have seen both their property value and their property taxes increase drastically.

“People that had lived in the communities for 40, 50, 60 years all of a sudden were seeing taxes increase, in some areas, up to 400%. Maybe they were on a fixed income [or] social security, they couldn’t pay those taxes. So, something needed to be done,” said Urbikit. “Because of that clause in the constitution that says all properties in a given class must be taxed uniformly, there wasn’t a lot the legislature could really do.”

Even the bills that were passed, said Urbikit, might not be constitutional. She said, specifically, the veterans exemption could be considered unconstitutional. Under Article 15, Section 11 of the Wyoming Constitution, the legislature can only set the tax rate for each class but cannot provide any exemptions or create any new classes or subclasses.

Constitutional

Amendment A

Due to the limits put on property tax exemptions or property tax reform by the constitution, voters will get the opportunity to vote on Constitutional Amendment A.

“This constitutional amend­ment, quite simply, creates a fourth tier. It takes residential out of that ‘all other’ category and puts it in its own category. It further goes on to say that the legislature may create a subclass,” said Urbikit. “So, you could have a subclass of owner occupied [residential properties] so that could be treated differently as well.”

According to Urbikit, that is literally all the constitutional amendment does.

“It doesn’t reduce your taxes. The bill they passed this last session that caps it [property taxes] at 4%, that’s called a ‘trigger bill.’ So, it says specifically in the language if this constitutional amendment passes, then this bill will be enacted. We know that that will happen,” said Urbikit. “What else could happen? We don’t know. What we do know is we can’t have meaningful tax reform or tax assistance for residential properties—for grandma—unless we give it to WalMart.”

What about the subclass?

With the ability to create a subclass should the constitutional amendment pass, the legislature could more easily provide tax exemptions to residential property owners, said Urbikit. This means that exemptions for seniors and veterans wouldn’t run the risk of being challenged in court. It also meant, said Urbikit, that the legislature could potentially create subclasses to increase taxes on properties which aren’t occupied by the owner.

“The Wyoming Realtors have had a position for as long as I’ve been involved that has always said we support the fourth tier and we support any legislation that will help people stay in their homes,” said Urbikit. “We believe homeownership is critical to communities, it’s critical to the viability of our towns and cities, and any legislation that can help people stay in their homes we’re going to support.”